Guides
How to rank your physical therapy service lines by contribution per slot hour
A method to rank your own physical therapy service lines by contribution per therapist slot hour, with six variables, a formula and a worked dollar example.
What to take away
- The title is a method, not a list. This page shows how to rank your own service lines, and it does not rank the trade's.
- The number that ranks services is contribution per therapist slot-hour, after variable cost, documentation time and the probability the slot is actually delivered.
- The same service can be the most profitable line in one practice and a loss in the practice next door, because of one payer contract or one scheduling habit.
- Run the arithmetic below on every line once a quarter and let the result, not the menu, decide what the front desk offers first.
Why no ranking appears here
A ranking of services by profit assumes a fee. In this trade the fee for most work is an allowed amount set by a payer under a contract you signed, and it differs by payer, by state and by year. The cash lines have fees you set, and those depend on your market.
Documentation time differs by therapist. No-show rates differ by patient population and by how well the front desk enforces the policy.
What a page can give you is the method. It takes an afternoon with your own reports and it produces a ranking that is true for you.
The six variables
For each service line, from your own records:
Variables to pull from records
- r: collections per visit, blended across payers
- v: variable cost per visit
- t: therapist minutes per visit, including notes
- a: share of scheduled visits delivered
- d: share of delivered visits paid without rework
- s: assistant share of therapist time
- r: allowed amount or cash fee per visit, in dollars.
- v: variable cost per visit, in dollars. Supplies, claim billing cost, and the front desk time that visit consumes.
- t: therapist minutes per delivered visit, treatment plus documentation.
- a: the share of scheduled visits that are delivered, or 1 minus the no-show and late-cancellation rate.
- d: the share of the charge that survives to payment, after denials and write-offs.
- s: the share of the visit an assistant or aide may deliver under your state rules.
Six numbers per line, all from the same quarter.
The slot-hour formula
The formula in symbols
Contribution per delivered visit: c = (r x d) minus v.
Contribution per therapist hour
- 1. Contribution per delivered visitc = (r x d) - v
- 2. Therapist minutes per scheduled visitT = t / a
- 3. Contribution per therapist hourH = c x 60 / T
- 4. Assistant share s improves H only if assistant hours fill
- 5. Rank lines by H, then attribute plan visits to evaluation
Therapist minutes per scheduled visit, allowing for slots that go undelivered: T = t divided by a. A slot that is scheduled and not delivered still consumed the therapist's availability.
Contribution per therapist hour: H = c x 60 divided by T.
Where an assistant delivers part of the visit, the therapist-hour figure improves by the share s, but only if the assistant's hours are themselves filled. An assistant column that runs half empty has not freed anything.
Worked example with dollar figures
Three lines, one practice, one quarter. The allowed amounts and costs below are typical commercial figures; your contracts set yours.
Therapeutic exercise, commercial payer: r = $120, v = $18, t = 40 minutes, a = 0.85, d = 0.95, s = 0.00.
c = (120 x 0.95) minus 18 = $96. T = 40 divided by 0.85 = 47.1 minutes. H = 96 x 60 divided by 47.1 = $122.
Initial evaluation, same payer: r = $150, v = $20, t = 75 minutes, a = 0.90, d = 0.95, s = 0.00.
c = (150 x 0.95) minus 20 = $122.50. T = 75 divided by 0.90 = 83.3 minutes. H = 122.50 x 60 divided by 83.3 = $88.
Cash wellness visit: r = $70, v = $10, t = 30 minutes, a = 0.70, d = 1.00, s = 0.00.
c = 70 minus 10 = $60. T = 30 divided by 0.70 = 42.9 minutes. H = 60 x 60 divided by 42.9 = $84.
| Service line | r | v | t | a | d | s | H |
|---|---|---|---|---|---|---|---|
| Therapeutic exercise, commercial | $120 | $18 | 40 | 0.85 | 0.95 | 0.00 | $122 |
| Initial evaluation, commercial | $150 | $20 | 75 | 0.90 | 0.95 | 0.00 | $88 |
| Cash wellness visit | $70 | $10 | 30 | 0.70 | 1.00 | 0.00 | $84 |
Read the last column: therapeutic exercise first at $122 per therapist slot-hour, the evaluation second at $88, cash wellness third at $84.
Rank the lines by H. Then look at two things the ranking hides:
- An evaluation has a low H on its own and a high H once you count the plan of care it starts. Attribute the plan's visits to the evaluation when you compare an evaluation-heavy line against a maintenance line.
- A line with a high H and few buyers is a niche, not a strategy. Multiply H by the slots you can actually fill with it.
What moves each variable
| Variable | What raises it | Who controls it |
|---|---|---|
| r | Payer mix, contract terms, cash fee setting | The payer, and you through which contracts you sign |
| v | Supply discipline, billing cost per claim | You |
| t | Documentation templates, slot length matched to the visit | The therapist and the schedule |
| a | The cancellation policy and how the front desk enforces it, booking the whole plan at once | The front desk |
| d | Documentation that meets the payer's standard the first time | The therapist |
| s | Supervision rules and how the schedule is built | The state board sets the rule; you build the schedule |
Two rows deserve a second look: variable a is cheapest to move because a written policy explained at intake costs nothing. Variable d is the one most owners underestimate. A line paid late or after resubmission has a lower H than the fee schedule suggests.
What moves each variable
Variable
- r
- Payer mix, contract terms, cash fee
- v
- Supply discipline, billing cost
- t
- Documentation templates, slot length
- a
- Cancellation policy, front desk enforcement
- d
- Documentation meeting payer standard
- s
- Supervision rules, schedule build
What raises it
- r
- Payer and you
- v
- You
- t
- Therapist and schedule
- a
- Front desk
- d
- Therapist
- s
- State board and you
Who controls it
- r
- v
- t
- a
- d
- s
For Medicare, CMS therapy services page and linked compliance material describe the documentation problems that cause it.
Running it
- Pull three reports for the last quarterschedule by visit type, remittances by visit type and payer, and denials by visit type.
- Time a week of real visits per therapist, including notes, and set t from that rather than from the slot length.
- Compute c, T and H per line. Put them in one table.
- Mark each line as additive or displacing, using the empty-slot map of the calendar.
- Decide what the front desk offers first when a slot opens, and write it down.
Repeat quarterly. Payer remittances drift, a new therapist changes t, and a change at the front desk changes a.
Running the ranking quarterly
- 1. Pull schedule, remittances, denials by visit type
- 2. Time a week of real visits to set t
- 3. Compute c, T and H per line in one table
- 4. Mark each line additive or displacing
- 5. Decide what front desk offers first when a slot opens
Two rules the arithmetic does not override
The state physical therapy board decides which lines a licensed person may deliver and who may assist; the licensing and compliance guide sets out how to get that in writing. Whatever H says, a line outside scope is not a line.
And the way a line is described to a patient is bounded by the FTC advertising guidance for small business, which asks for truthful, substantiated claims. A high-contribution line sold with an outcome promise is a complaint waiting to happen, and the marketing and growth guide covers what may be said.
Keeping the records that make this possible
The arithmetic needs remittances by line, schedule by line and time by visit type. If your reports cannot produce them, that is the first fix. It is also what the IRS guidance on which records to keep expects a business to be able to show anyway.
The operations and workflow guide covers what the schedule should record. The hiring and training guide covers getting therapists to time their own documentation without treating it as surveillance. The full menu of service line types is in that guide.
Common questions
Is cash-pay always more profitable than insurance?
Not necessarily. Cash lines have no allowed-amount ceiling and no denials, so r and d look better. But a is often worse, because no plan of care holds the patient to a schedule and the slots may be harder to fill. Run the numbers.
Should I drop my lowest-H line?
Only if the slots it fills would be filled by something better. An empty slot has an H of zero.
How do I count the evaluation?
Attribute the visits in the plan of care it starts to it when comparing lines that start plans against lines that do not. Otherwise every evaluation looks like a loss and every maintenance visit looks like a win, which is backwards.
